There are countless resources for learning how to reduce your expenses and stretch a dollar, but what should you be doing with the money you save from all of these savings activities? Here are some suggestions for where to save your money during a recession:
Certificate of Deposit – when you put money in a CD, you're committing to leaving your money in the bank for a specific period of time, for a specific interest rate. The interest rate you lock in at is fixed throughout the duration of the certificate, but if you pull your money out before the CD has matured, you will not benefit from the full interest earnings. You will also have to pay early termination penalties in most situations. Choose a bank that is FDIC insured and that way you know you'll get your money back even if the bank closes due to the recession.
Savings Account – while a savings account is often passed over during times of economic strength for having lower interest rates than other investments and savings options, it's stability is good for people who are looking for a safe place to save money during a recession. The money you save will earn a low rate of interest, but is FDIC insured.
Interest Checking Accounts – if you are accessing your money regularly but still want the option of earning interest when it's not being used, an interest checking account is a good option. Some checking accounts offer interest rates that are as good (or better) as a traditional savings account, but make sure there aren't exorbant fees that will eat any interest you earn. If you use a debit card or ATM card with your checking account, keep an eye on fees for withdrawing money from other banks.
Real estate – for individuals with money to invest, home prices drop during a recession to create a buyer's market. If you've been wanting to purchase real estate to rent out or sell later at a profit, now may be a good time since the prices are lower, and the interest rates on mortgages are often lower. When the recession ends, the homes will become more expensive and the cost of financing real estate increases as well. If you can buy property or housing now and sell it once the market turns around, you stand to make a good profit.